US economy comes to a screeching halt; GDP slows at 1.5 percent

This is a RUSH transcript from "The O'Reilly Factor," July 27, 2012. This copy may not be in its final form and may be updated.

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LAURA INGRAHAM, HOST: Now, let's get right to our "Top Story". The U.S. economy, it came to a screeching halt this spring growing at an anemic rate of 1.5 percent. And if that wasn't bad enough news for President Obama's re-election chances, a new poll from Gallup shows that approval of him by American business owners fell in the second quarter of 2012 to just 35 percent. So what will the political fallout be from these reports?

Joining us now from Washington, D.C., economist Peter Morici and Simon Rosenberg President and Founder of NDNA it's a center-left think tank.

All right, gentlemen great to see you tonight. Let's -- let's talk first Peter about these numbers because, 1.5 percent seems to be disastrously slow for a GDP growth. We need to grow jobs at about 200,000 per month pace and right now our domestic output is cratering. What say you?

PETER MORICI, PH.D., ECONOMIST: Well, we would have to grow at three percent a month to -- a quarter, I mean -- to get the kind of jobs creation we need. And this is half that rate.

Simply consumers lost confidence in the second quarter. They don't believe Mr. Obama's policies are working. They are very skeptical about his criticism of the private sector. And this is just a terrible report. It means more lousy job reports this summer.

INGRAHAM: Simon, the President came out today with a new ad and it debuted on a national television. But, saying I believe, I believe in free enterprise. I believe, that's -- that's nice.

But the fact of the matter is it looks like free enterprise isn't believing in him as it might have two and a half, three years ago.

SIMON ROSENBERG, PRESIDENT OF NDNA: Well, there is no question that I think that Barack Obama wishes the economy was growing at a more rapid rate and that Mitt Romney wishes that it was growing at a slower rate. I don't think the economy is growing as fast as Obama wants or is doing as bad as Mitt Romney wants --

INGRAHAM: Well that means, I'm sorry I meant to say that Mitt Romney wants the economy to crater.

ROSENBERG: And so Laura I'm going to answer your question.

INGRAHAM: That's ridiculous but go ahead.

ROSENBERG: That's ok. That's ok, so I think the point of this is that I don't think the economy is growing as fast as Obama wants or as slow as Mitt Romney's campaign needs for Barack to get unelected.

Barack in the latest polling is still up by six points in the "Wall Street Journal" poll. If the election were held today, he would win. I mean that's the opinion that matters most in the United States, the opinion of the voters.

And I think what we're going to see now is a debate about what to do now. And I think on those grounds, the balanced Obama approach, right, tax cuts for working people. Investments in infrastructure; long term R&D. Education and a -- and a glide path to bring the deficit under control is much more what the economy needs now and much more what voters want. I think he is in a strong position to get re-elected this year.

INGRAHAM: Simon, do you think what the President has done --

ROSENBERG: Yes.

INGRAHAM: -- and what he pledged his path forward would bring to America, has that come to fruition?

ROSENBERG: I think he's gotten a lot more done and there has been a lot more progress than is commonly understood. When he took office we were losing almost 700,000 jobs a month. We have now grown for 12 consecutive quarters. There is growth. It's not sufficient. I'm not going to be Pollyannish (ph) about this, right.

INGRAHAM: It's the worst recovery we've ever had in the history of the country since I believe the Depression.

ROSENBERG: But it a recovery. It is a recovery and when he came in he was facing the worst economic conditions in 70 years.

(CROSSTALK)

INGRAHAM: It did. Ok, let me just --

(CROSSTALK)

ROSENBERG: Things are clearly better. They are just not as good as they need to be.

INGRAHAM: Ok, let me -- let me state it a different way, Peter and you react to this. If the President had campaigned in 2008 and said by the end of my first term voters you're going to have a 1.5 percent GDP rate because my stimulus and my healthcare plan are going to bring this whole new era to the way we -- we -- no aura, excuse me to the way we're thinking about business in the United States.

Do you think he would have been elected in 2008 with that campaign platform?

MORICI: Certainly not; folks would have translated that into an eight percent unemployment rate. You know this guy did not inherit the biggest hole of any post-war president. Ronald Reagan inherited a terrible mess and unemployment peaked at 10.4 percent for him not 10 percent the way it did for Mr. Obama.

You know at this point Mr. Reagan had the economy growing at six percent, whereas Mr. Obama has growing it two percent. He had gotten unemployment down at seven percent, Mr. Obama has it about eight percent. Simply, this guy didn't inherit a bigger mess. What he does is alibi better than anybody I've ever seen.

INGRAHAM: Oh why is Mitt Romney not ahead in every single poll and not ahead significantly if in fact things are as bad as you say, Peter and some economists are saying? I mean, Romney isn't certainly turning this into some big path to victory at least not so far.

MORICI: Well, there's two factors. One is that he has not done a good job of explaining how he would create jobs. Running around the country saying tax cuts and deregulation reminds folks too much of George Bush.

And the other is he keeps committing these gaffes. I mean, we -- we may take his comments about the Olympics in context -- in that context that they are just fine. However, you know the press takes them out of context it isn't the only mistake he's made. The guy has simply got to do a better job of campaigning and explaining.

INGRAHAM: Do you think, Simon by next quarter we will see greater growth? Do you there is any signs in the horizon that indicate that things are getting better and significantly so?

ROSENBERG: Yes -- I think two things. One is I think the projections for the third quarter has GDP up over two percent which means that the President will be able to say in that final month of the election the economy is getting better. He is not going to say it's great. He's never said that; he can say though it's getting better.

And the second thing is I just want to agree with Peter for a second which is Mitt Romney's struggle with making sense of things. I mean if you look at what he's saying now about how he wants to create growth. He's saying we've got to get rid of this debt. You know we've got to unleash the private sector. And yet, his own plan for the economy increases the deficit by $2 trillion.

Look at the three things that he's promoting right now -- tax cuts, defense increases, rolling back Obamacare -- all of those will explode a hole in the deficit much bigger than what President Obama has proposed. So he's not making any sense right now which is one of the reasons I don't think he's connecting with the American people on the basic economic conversation that's so critical for this election.

INGRAHAM: Well, yes -- well, I think -- well, I think that the 35 percent approval rating that Barack Obama is getting from the business community is quite telling. I mean you can't spin that number. I mean, five points here, six points there but 35 percent? Something -- something is not clicking there with Obama and the free market.

ROSENBERG: Yes I think -- right.

INGRAHAM: Gentlemen, we appreciate it thanks so much.

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